Productivity Movement and Labour-Management Relations
Japan’s Postwar History and Future
YUKUO AJIMA, JILAF
1. Present Situation in Japan
The globalization of the economy is accelerating as a result of the advance of the
information technology revolution. In order to respond to international competition, there
is a clear tendency for companies to pursue strategies for making production, sales, and
investment decisions on a global scale. The societies, economies, and cultures of
countries are being heavily impacted. On the one hand, there is the possibility that
people can enjoy the benefits of economic affluence through the decline of prices and an
abundant supply of goods. On the other hand, people are also facing social insecurity in
the form of unemployment. In addition, the competitive society is giving rise to large
income disparities, and a new class society is emerging.
After the collapse of the bubble economy, the Japanese economy entered a
prolonged slump in the 1990s that saw the stagnation of the real economy and, in parallel
with this, the continued decline of prices – in other words, deflation. On a financial base,
the nominal gross domestic product has continued to shrink after reaching a peak in
1997. Furthermore, the fall of property and land prices has been striking, so that the
Japanese economy really has dropped into a state of historic deflation. The state fiscal
administration depends on national bonds for 45% of its revenue, and the outstanding
national debt has reached \500 trillion ($4.7 trillion), equivalent to GDP.
Therefore, invigorating the Japanese economy through public works is impossible. In
order to break out of the deflationary situation and lift the economy onto a growth track of
2% - 3%, it is important to (a) restore the competitiveness of manufacturing industries, (b)
carry out a restructuring of the service industries, where productivity is low, and (c)
rejuvenate personal consumption by solving such issues as employment, pensions,
medical care, and nursing care, which are the cause of uncertainty among the public. In
particular, though, what is required most of all now is the improvement of productivity
through innovations in the private sector.
ReferenceⅠ: Basic Knowledge of Japan
2. Looking Back on History
A large area of Japan’s land was destroyed in World War II, and in 1953 the country’s per
capita GDP was down to $270, only 16% of that of the United States. After that, however,
Japan’s economic development was spectacular, and by 40 years later it had developed
into the world’s second largest economic power, with an economic scale that was the
equivalent of the three countries of Germany, France, and Britain combined. Of course,
during that period there were major crises, such as the oil shock of 1973 and
hyperinflation, but the government, labour, and management cooperated to overcome
them. In particular, the productivity movement put into practice by labour and
management became an important driving force for economic development. At the
enterprise level, the productivity movement was tied to strengthening the
competitiveness of the company by boosting the quality of products and developing new
products and in turn raising the standard of living of workers.
Reference Ⅱ : History of the Productivity Movement and Development of the
Productivity Movement in Japan;
ReferenceⅢ: Labour Relations Declaration, Toyota Motor Corp.
2-1 Productivity Movements in Japan
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*1954: Decision on principles for the establishment of a new productivity center by the
Ministry of International Trade and Industry
(a) It should be a nongovernmental and nonprofit organization.
(b) It should be composed of labour, management, and academic representatives.
The cabinet then decided on the establishment of the Japan Productivity Center (JPC),
which was founded in 1955 and announced the Three Guiding Principles of productivity.
*1969: The National Labour Union Productivity Council was established to gauge the
attitudes of labour and management toward the productivity movement.
2-1-1 Opposing views among labour and management at the time of the JPC’s
establishment in 1955:
*Labour: Under the pretext of cooperation between labour and management, the new
productivity center will encourage strengthened control of labour, reduction of
employment, and wage restraints by employers.
*Management: The raising of productivity is the sole prerogative of employers and is not
something on which labour unions should be allowed to have a say.
2-1-2 Realization of labour-management agreement and cooperative relations
*Fierce labour-management disputes and reflections by labour and management on
their abuses
The demand of the postwar labour movement was “Give us rice to eat tomorrow.”
Long strikes were frequent, and both labour and management became exhausted.
Management would not respond to the demands of union members if they would not
make the pie to be divided any bigger.
*Statement by national center at the time
Five Conditions for the Productivity Movement
National Labour Union Council July 2, 1955
1. The productivity movement is a movement that will be conducted in a comprehensive
manner, on the basis of the national economy, with the aim of developing Japan’s
industry and realizing an autonomous economy. It should be thoroughly understood that
this productivity movement differs from simple movements to increase efficiency and
conventional capitalist-centered movements that have been carried out to rationalize
companies and increase private profits.
2. The objectives of the productivity movement are to increase employment by
expanding the scale of the economy, raise the living standards of the nation by improving
productivity, improve working conditions, and increase real wages. We are absolutely
opposed to the use of productivity improvement to tighten controls on labour or as a
means of dismissal.
3. In readiness for concern about unemployment and changes in the workplace as a
result of corporate reorganization that might partially occur as transitional phenomena of
the productivity movement, the government and employers should adopt comprehensive
employment stability measures and, in individual companies, in response to productivity
improvements, should endeavor to maintain employment through such policies as the
shortening of working hours without any lowering of working conditions.
4. One of the main reasons for the management uncertainty and hardship in small and
medium-sized companies is the low level of productivity. Accordingly, in the process of
the productivity movement, it is necessary to discover measures to establish the
management base of small and medium-sized companies and make efforts to promote
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them.
5. The productivity movement will not yield satisfactory results without the support and
cooperation of labour unions. Accordingly, in order to conduct this movement,
consultations and mutual understanding between labour and management at the
industrial level, business level, and individual company level must be properly carried
out. Furthermore, it is necessary to positively recognize the opinions of labour unions
regarding industrial policy and management.
2-1-3 Confirmation of the Three Guiding Principles of the productivity movement and
development of enlightenment activities
*Maintenance and expansion of employment
*Consultation and cooperation between labour and management
*Fair distribution of results (company, workers, consumers)
The Three Guiding Principles of the Productivity Movement
Improving the productivity of industry is an urgent issue for achieving the independence
of the Japanese economy and raising the living standards of the nation. From this
perspective, the projected productivity movement must develop as a national movement
with the deep understanding and support of all of the people. Accordingly, we understand
the basic ideas of the movement to be as follows:
1. The improvement of productivity ultimately will lead to an increase of employment.
With regard to transitional surplus labor, the government and the private sector shall
cooperate to adopt appropriate measures to prevent unemployment by, for example,
redistributing labour as far as possible from the perspective of the national economy.
2. Regarding specific methods of improving productivity, labour and management shall
cooperate in studies and consultations in accordance with the actual conditions of the
company concerned.
3. The fruits of the productivity improvement shall be distributed fairly among
management, labour unions, and consumers in accordance with the actual condition of
the national economy.
2-1-4 Diffusion and entrenchment of labour-management consultation system at the
company level
*Difference between collective bargaining and the labour-management consultation
system in Japan
Collective bargaining  Fair distribution of results, improvement of working conditions
Labour-management consultations  Increase of results, raising of productivity
(4) Practical Efforts Toward Improving Productivity
Process innovation and product innovation
Team-based improvement activities - Team results
Methods of problem solving
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3 Environmental Changes Facing Japan
3-1. Economic globalization
・Supremacy of the market economy . . . Intensified competition, market violence
(unemployment, poverty)
・Reduction of high labour costs . . . Wage restraint, personnel cuts
(increase of unemployment rate, increase of nonregular workers)
・Breakaway from deflationary economy
3-2. Development of advanced information technology (IT revolution)
・Promotion of globalization . . . Money game trend
・Diverse ways of working: employment treatment system
3-3. Declining birthrate and aging
・Change in population structure
Society with employment for everybody who has a desire to work and ability
3-4. Global environmental preservation (resource-cycling society)
Revision of lifestyles and values
RefernceⅣ: Action program 2003-2004 of the Japan Council of Metalworkers' Unions
(IMF-JC)
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